m-up holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.11B
• Operating Income: ¥2.70B
• Net Income: ¥1.89B
• EPS: ¥47.83

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: A strong FY2026 Q2 with double-digit top-line growth translating into outsized profit expansion, albeit with weak cash conversion. Revenue rose 23.2% YoY to 151.1, while operating income climbed 38.0% YoY to 27.0 and ordinary income increased 41.1% YoY to 27.9, indicating solid operating leverage. Net income jumped 103.8% YoY to 17.0, pushing the net margin to roughly 11.2%. Gross margin stood at 30.2% and operating margin at about 17.9%. Operating margin expanded by about 190 bps YoY (from ~16.0% to ~17.9%), and net margin expanded by roughly 445 bps YoY (from ~6.8% to ~11.2%). The DuPont-derived ROE was a healthy 17.5% (Net Margin 11.2% × Asset Turnover 0.57 × Leverage 2.73x), driven primarily by margin expansion. Earnings quality is a key watch point: operating cash flow was 7.66 versus net income of 16.99, yielding an OCF/NI of 0.45x, below the 0.8x quality threshold. Liquidity is adequate but not robust with a current ratio of 1.21x and quick ratio of 1.21x; current liabilities are sizable at 166.1 against cash and receivables of 142.3. Capital allocation leaned shareholder-friendly with share repurchases totaling 5.99; capex was modest at 0.07. Balance sheet leverage by the reported D/E (1.73x) is above conservative benchmarks but below red-flag levels; noncurrent liabilities remain low at 1.81. Reported ROIC (-153.1%) appears distorted by the calculation base rather than true economic value destruction; nevertheless, it highlights the need to scrutinize invested capital efficiency. Tax rate was 32.5%, consistent with domestic norms. Forward-looking, the margin trajectory is favorable, but sustainability hinges on cash conversion improving and working capital normalizing. With several items unreported (interest expense, detailed SG&A, investing cash flows, dividends paid), the analysis emphasizes trends visible in the disclosed data while acknowledging limitations.

Profitability Analysis

ROE decomposition (DuPont): ROE 17.5% = Net Profit Margin 11.2% × Asset Turnover 0.57 × Financial Leverage 2.73x. The most influential change vs last year appears to be margin expansion, as operating income (+38.0% YoY) and net income (+103.8% YoY) outpaced revenue growth (+23.2% YoY). Operating margin rose from roughly 16.0% to 17.9% (+~190 bps), and net margin from ~6.8% to ~11.2% (+~445 bps), indicating improved operating leverage and mix. Business drivers likely include scale benefits and a richer revenue mix (e.g., higher-margin digital services), with only modest D&A (0.94) and tight SG&A ratio (SG&A/Revenue ~12.3%). Sustainability: while part of the expansion seems structural (scale, mix), the magnitude in net margin suggests one-off positives or timing (e.g., lower below-OP items or fewer extraordinary costs); persistence into 2H requires confirmation. Watchpoints: SG&A growth YoY is unreported, but the large spread between revenue and operating income growth is positive; ensure SG&A does not reaccelerate faster than revenue. Non-operating result was small net positive (0.95 income, 0.02 expense), so core profitability primarily drove ordinary income.

Growth Assessment

Top-line growth of +23.2% YoY to 151.1 is robust. Profit growth outpaced sales: operating income +38.0% and ordinary income +41.1%, underscoring operating leverage. Net income surging +103.8% reflects both operating improvements and clean below-OP lines, but such a step-up is unlikely to repeat at the same pace. Revenue sustainability appears reasonable given scale and content-driven businesses, but visibility hinges on pipeline (events, releases, MAU/ARPU) and seasonality into 2H. Margin sustainability depends on maintaining mix and cost discipline; current SG&A ratio ~12.3% leaves room for reinvestment if growth holds. With D&A low and capex minimal, expansion is not capex-intensive, supporting scalability. However, weak cash conversion (OCF/NI 0.45x) tempers the quality of growth and may reflect working capital build; normalization is key for durability.

Financial Health

Liquidity: Current ratio 1.21x (above 1.0 but below the 1.5x comfort benchmark); quick ratio 1.21x. No explicit red flag (CR <1.0) but cushion is moderate. Current liabilities (166.1) are high versus cash (109.2) and receivables (33.1), implying diligent cash management is required. Solvency: D/E 1.73x exceeds our conservative benchmark (1.5x) but is below a severe warning (2.0x). Noncurrent liabilities are small (1.81), concentrating maturity within the short term. Maturity mismatch: manageable as current assets (201.5) exceed current liabilities (166.1), yielding positive working capital (35.37), but reliance on short-term funding/creditors (payables 71.45) is notable. Off-balance sheet: not reported; no explicit disclosures available in the provided data.

Cash Flow Quality

OCF/NI of 0.45x is below the 0.8x threshold, indicating weak cash conversion this half. OCF (7.66) trails NI (16.99), suggesting working capital absorption (specific drivers unreported) or timing effects. Capex is minimal (0.07), so FCF should be close to OCF absent investing flows; however, investing CF is unreported, preventing a full FCF view. Financing CF was -12.38, including share repurchases of -5.99; absent dividend cash figures, aggregate shareholder returns likely approached or exceeded OCF, tightening the cash balance trajectory. No clear signs of working capital manipulation can be concluded from point-in-time balances; however, the OCF shortfall vs NI warrants monitoring of receivables turnover, payables cycles, and any deferred revenue movements (not disclosed). Sustainability: improving OCF/NI toward ≥1.0x is needed to underpin ongoing buybacks and potential dividends.

Dividend Sustainability

The calculated payout ratio is 38.7%, within a generally sustainable range (<60%), but dividends paid are unreported. If we proxy dividends at ~6.6 (38.7% × NI 16.99), OCF of 7.66 barely covers dividends before considering buybacks (5.99), implying tight cash coverage in the period. With capex negligible, structural FCF should support modest dividends, but current weak cash conversion reduces headroom. Policy outlook: with earnings growth and ample cash on hand (109.2), the company can likely maintain a conservative dividend; expansion of shareholder returns would prudently depend on a rebound in OCF and clearer visibility on 2H cash generation.

Risk Assessment

Business Risks:

• Dependence on content pipeline and partner/artist IP; hit-driven revenue introduces volatility.
• Event/activity cyclicality (e.g., live entertainment cadence) impacting quarterly sales and margins.
• Platform dependency risk (app store commissions, algorithm/policy changes) affecting monetization.
• Competitive intensity in digital content/fan engagement services pressuring ARPU and retention.

Financial Risks:

• Weak cash conversion (OCF/NI 0.45x) raising short-term funding and liquidity management risk.
• High current liabilities relative to liquid current assets, increasing rollover and working capital stress if OCF lags.
• Leverage above conservative benchmark (D/E 1.73x) reduces balance sheet flexibility.
• Share repurchases (5.99) reduce cash buffers if not matched by stronger OCF.

Key Concerns:

• Reported ROIC (-153.1%) implies capital efficiency concerns or denominator distortions; requires methodology review.
• Data gaps (investing CF, interest expense, dividend cash) limit full assessment of coverage and risk.
• Potential tax rate variability (32.5% this period) could impact net margins if one-offs normalize.

Investment Implications

Key Takeaways:

• Strong revenue growth (+23.2% YoY) translated into outsized profit growth (OP +38.0%, NI +103.8%).
• Margin expansion is clear: operating margin +~190 bps YoY; net margin +~445 bps YoY.
• ROE solid at 17.5%, primarily margin-driven rather than leverage-driven.
• Cash conversion is weak (OCF/NI 0.45x), a primary quality flag that tempers the profit strength.
• Liquidity adequate but not ample (CR 1.21x); current liabilities are sizable versus liquid assets.
• Capital returns ongoing via buybacks (5.99); sustainability hinges on OCF improvement.
• ROIC metric flagged negative; capital efficiency and invested capital measurement warrant deeper review in the next filing.

Metrics to Watch:

• OCF/Net Income ratio (target ≥1.0x) and working capital movements (AR, AP, deferred revenue).
• SG&A as a percentage of revenue and its YoY growth vs revenue growth.
• Operating margin trajectory through 2H and full-year guidance revisions (if any).
• Cash balance versus cumulative shareholder returns (dividends + buybacks).
• Any disclosure on interest-bearing debt and interest expense to gauge coverage.
• Customer/partner concentration and pipeline indicators (MAU/ARPU, booking backlog, event schedule).

Relative Positioning: Within domestic digital content/platform peers, the company exhibits above-peer margin momentum and robust ROE but lags on cash conversion and carries a higher-than-conservative leverage profile; near-term performance leadership depends on sustaining operating leverage while normalizing OCF.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis